The
question that arises for consideration in this appeal is whether physical
Research Laboratory (for short 'PRL'), the appellant, is an 'industry' within
the meaning of section 2(j) of the Industrial Disputes Act.

The
facts and circumstances which gave rise to this question are as follows. The
respondent was appointed by PRl as Scientific Glass Blower on 25.10.48. He
continued to word as such till 11.5.76 when he was transferred to photography
Documentation services on a post which was non-technical and administrative. On
31.12.78 he attained the age of 58 years.

He
was, therefore. retired from service with effect form 1.1.79. Feeling aggrieved
by his retirement at the age of 58 years and not at 60 he filed a writ petition
in the High court of Gujarat by it was with He then filed a complaint before
the Labour commissioner who, on the basis thereof, made a reference to the Labour
court at Ahmedabad.

The Labour Court rejected the contention of the
appellant that it was not an 'industry' within the meaning of Section 2(j) of
the I.D. Act. Though it recorded a finding that PRL is purely a research
institute and the research work carried on by it is not connected with
production supply or distribution of goos or services yet it took the aforesaid
view following the decision of this court 1978 (2) SCC 213 as it further found
that PRL is carrying on, in an organised and systematic manner, the activity of
research in its laboratory by active co-operation between itself and its
employees and the discoveries and invention made would be eligible for sale. in
taking the view that PRL is an 'industry' it also followed the decision of the
Gujarat High court in physical Research Laboratory Employees Union vs. A.N. Ram
(special civil Application No. 1082 of 1979), a case under the Trade Unions
Act, wherein it was observed that "In view of the decision of the supreme
Court in Bangalore Water Supply & Sewerage Board v. A. Rajappa and others
A.I.R. 1978 S.C. 548, it is not open to doubt that the employees working with
the physical Research Laboratory Ahmedabad, would come within the definition of
" workmen" under the Industrial Disputes Act and other similar
legislation in the field of relations between employers and employees." on
merits, it held that the respondent having worked for a long period from 1948
to 1976 on a technical post could not have been treated as a person working on
the administrative side merely because towards the fag end of his career he was
transferred to a post on the administrative side and at the time of attaining
the age of 58 years he was working on such a post. The Labour Court held that the respondent was entitled
to continue in service up to the age of 60 Years. Therefore, the order,
retiring him earlier, was declared as bad and it was held that he was entitled
to reinstatement with full back wages. As the respondent had already completed
the age of 60 years by then no order of reinstatement was passed but only back
wages for those two years were ordered to be paid.

The
appellant has approached this court directly against the award of the Labour
court as the Gujarat High court has already taken the views that PRL is an
'industry' and different High court and Tribunals have expressed conflicting
views on the question whether research institutes run by the Government can be
said to be 'industry' as defined by section 2(j) of the I.D. Act. on 1.2.93,
when special Leave petition, out of which this appeal arises, was listed for
hearing a statement was made by the learned counsel for the appellant that
irrespective of the decision on merits this court should decide whether
research institute of the type of PRL can be said to be 'industry'. This court
passed an order for issuing notice indicating that the matter will be finally
disposed of at the notice stage itself.

Our
attention was first drawn by the learned Attorney General who appeared for the
appellant to the facts which are not in dispute. PRL is a public trust
registered under the Bombay public Trust Act., 1950. It is a
research institute and was established bu Dr. Vikram Sarabhai for research in
space and allied science. It is financed mainly by the central Government by
making provision in that behalf in the Union Budget and nominally by the
Government of Gujarat, Karmakshetra Education Foundation and Ahmedabad Eduction
society. it is virtually an institute falling under Government of India's
Department of space. Its object is to conduct and is, therefore, engaged in
conducting advance research in (1) astronomy and Astrophysics, (2) planetary
atmosphere and aeronomy , (3) earth science and solar system studies and (4)
theoretical physics. It is the case of the appellant that the research work is
done in the institute by eminent scientists who engage themselves in resolving
problems of fundamental sciences on their own. It is not directly of indirectly
carrying on any trade or business and its activities do not result into
production or distribution of goods or services calculated to satisfy human
wants and wishes. The knowledge acquired as a result of the research carried on
by it is not sold but is utilised for the benefit of the government. it was,
therefore, submitted by the learned Attorney General that PRL being a purely
research institute of the central Government engaged in carrying on fundamental
research regarding the origin and evolution of the Universe and the atmosphere
of the earth is not an 'industry' as defined by section 2(j). He further
submitted that the activity of research is carried on mainly by the scientists
engaged for that purpose and incidentally with the help of a few other
employees. He also submit that the research work carried on by the PRL is more
in the nature of venture and, therefore, also it would not fall within the
purview of section 2(j) of the I.D. Act. The question : what is an 'industry'
under the Industrial Disputes Act ? has been answered by this court in
Bangalore Water Supply case (supra) as under :

"I
140. 'Industry', as defined in Section 2(j) and explained in Banerji (supra) ,
has a wide import.

(a)
Where (i) systematic activity, (ii) organized by co-operation between employer
and employee (the direct and substantial element is chimerical) (ii) for the
production and/or distribution of goods and services calculated to satisfy
human wants and wishes (not spiritual or religious but inclusive of material
things or services geared to celestial bliss e.g. making, on a large scale prasad
or food) , prima facie , there is an 'industry' in that enterprise.

(b) absence
of profit motive or gainful objective is irrelevant, be the venture in the
public, joint, private or other sector.

(c)
The true focus is functional and the decisive test is the nature of the
activity with speical emphasis on the employer-employee relations.

(d) If
the organization is a trade or business it does not case to be one because of
philanthropy animating the undertaking.

II
141. Although section 2(j) uses words of the widest amplitude in its two limbs,
their meaning cannot be magnified to overreach itself.

(a)
'Undertaking' must suffer a contextual and associational shrinkage a explained
in Banerji (supra) and in this judgment; so also, service calling and the like.

This
yields the inference that all organized in I (supra) , although not trade or
business, may still be 'industry' provided the nature of the activity, viz. the
employer- employee basis, bears resemblance to what we find in trade or
business. This takes into the fold of 'industry' analogous to the carrying on
the trade or business'.

All
features, other than the methodology of carrying on the activity viz. in
organizing the co- operation between employee, may be dissimilar. It does not
matter, if on the employment terms there is analogy.

III
142. Application of these guidelines should not stop short of their logical
reach by invocation of creeds, cults or inner sense of incongruity or outer
sense of motivation for or resultant of the economic operations. The ideology
of the Act being industrial pease, regulation and workmen, the range of this
statutory must inform the reach of the statutory definition.

(b) A
restricted category of professions clubs, co-operative and even gurukulas and
little research labs, may substantially and, going by the dominant nature
criterion , substantively, no employees are entertained but in minimal matters.

marginal
employees are hired without destroying the non-employe character of the unit.

(c) If
in a pious or altruistic mission many employ themselves, free or for small
honoraria or like return, drawn by sharing in the purpose or cause, such as
lawyers volunteering to run a free legal services clinic or doctors serving in
their spare hours in free medical centre or ashramites working at the bidding
of the holiness, divinity or like central personality, and the services are
supplied free or at nominal cost and those who serve are not engaged for
remuneration or on the basis of master and servants relationship, then, the
institution is not an industry even if stray servants, manual or technical, are
hired.

Such
eleemosynary or like undertakings alone are exempt - not other generosity,
compassion, developmental passion or project IV 143. The dominant nature test :

(a)
Where a complex of activities some of which qualify for exemption, others not,
involves employees on the total undertakings, some of whom are not 'workmen' as
the University of Delhi case (supra) or some departments are not productive of
goods and services if isolated, even then, the predominant nature of the
services and the integrated nature of the departments as explained in the
corporation for Nagpur (supra), will be, 'industry' although those are not
'workmen' by definition may not benefit by the status.

(b)
Notwithstanding the previous clauses, sovereign function, strictly understood,
(alone) qualify for exemption, not the welfare activities or economic
adventures undertaking by government or statutory bodies.

(c)
Even in departments discharging sovereign function, if there are units which
are industries and they are substantially severable, then they can be
considered to come within section 2(j) (d) Constitutional and competently
enacted legislative provisions may well remove from the scope of the Act. categories
which otherwise may be covered thereby." Therefore, the question whether
PRL is an 'industry' under the I.D. Act will have to be decided by applying the
above principles; but , at the same time it has to be kept in mind that these
principles were formulated as this court found the definition of the word
'industry' as vague and "rather clumsy, vapourous and
tall-and-dwarf". Therefore, while interpreting the words 'undertaking'
calling and 'service' which are of much wider import, the principle of 'noscitur
a sociis' was applied and it was held that they would be 'industry' only if
they are found to be analogous to trade of business. Furthermore an activity
undertaken by the Government cannot be regarded as 'industry' if it is done in
discharge of its sovereign function. one more aspect to be kept in mind is that
the aforesaid principles are not exhaustive either as regards what can be said
to be sovereign function or as regards the other aspects dealt with by the
court.

In
this context, it is useful to chief Conservator of Forests and another vs. Jagannath
Maruthi Kondhare , 1969(2) SCC 293 wherein this court, while rejecting the
contention that as sovereignty vests in the people the concept of sovereign
functions would include all welfare activities on the ground that talking of
such a view would erode the ratio in Bangalore water supply, case. Observed
that "the dichotomy of sovereign and non-sovereign function does not
really exit - it would all depend on the nature or the power and manner of its
exercise" After referring to the three traditional sovereign function
namely legislative power the administration of laws and the exercise of the
judicial power and also the decision of the exercise of the judicial power and
also the decision of the Gujarat High court in J.J. Shrimali vs. District
Development Officer 1989(1) GLR 396, wherein famine and drought relier works
undertaken by the state Government were held not to and 'industry' this court observed
that "what really follows from this judgment is that apart from the
aforesaid three functions there may be some others functions also regarding
which a view could be taken that the same too is a sovereign function".

In
sub-Divisional Inspector of Post, Vaikam and others vs. Theyyam Joseph and
others, 1996 (8) SCC 489, this court had to sub-Divisional Inspector of post at
Vaikam is an 'industry'. Therein this court has observed that "India as a sovereign, socialist, secular,
democratic republic has to establish an egalitarian social order under rule of
law. The welfare measures partake the character of sovereign function and the
traditional duty to maintain law and order is no longer the concept of the
state. Directive principles of state policy enjoin on the state diverse duties
under part IV of the constitution and the performance of the duties are
constitutional functions. One of the duties of the state is to provide
telecommunication service to the general public and an amenity and so is an
essential part of the sovereign functions of the state as a welfare state. It
is not , therefore, an industry" . While taking this view this court was
also influenced by the fact that, the method of recruitment, the conditions of
the Extra-Departmental Agents employed said establishment are governed by the
statutory rules and regulations and that those employees are civil servants
Therefore, while applying the traditional test, approved by this court in
Bangalore water supply case to determine what can be regarded as sovereign
function the change in the concept of sovereign function of a constitutional
government has to be kept in mind. Relying upon these two in chief conservator
of Forests vs. Jagannath Maruthi Kondhare (supra ) and sub-Divisional Inspector
of post vs. Theyyam Joseph and others (supra), it was contended by the learned
work carried on by PRL should be regarded as a sovereign or governmental
function.

With
respect to research institutes this court in Bangalore water supply has observed as under :

"
Does research involve collaboration between employer and employee ? It does.
The employer is the institution the employee are the scientists, para -
scientists and other personnel. Is scientific research service ? Undoubtedly.
It is. Its discoveries are valuable contributions to the wealth of the nations,
such discoveries may be sold for a heavy price in the industrial of other
markets.

Technology
has to be paid for any technological inventions and innovations may be patented
and sold. In our scientific and technological age nothing has more case value,
as intangible goods and invaluable services than discoveries . it has been said
that his brain had the highest cash value in history for he made the word
vibrate with the miraculous discovery of recorded sound. unlike most inventors
he did not have he received it munificently on this gratified and grateful
earth thanks to conversion of his inventions into money aplenty. Research
benefits industry even though a research institute may be a separate entity
disconnected from the many industries which funded the institute may be a
separate entity disconnected from the many industries which funded the
institute itself it can be regarded as an organisation propelled by systematic
activity modelled on co- operation between employer and employee and inventions
and useful solutions which benefit individual industries and the nation in
terms of goods and services and wealth.

It
follows that research institutes, albeit run without profit-motive, are
industries." PRL is an institution under the Government of India`s
Department of Space. It is engaged in pure research work is already stated
earlier. The purpose of the research is to acquire knowledge about the
formation and evolution of the universe but the knowledge thus acquired is not
intended for sale. The Labour
Court has recorded a
categorical finding that the research work carried on by PRL is not connected
with production supply or distribution of material goods or services. The
material on record further discloses that PRL is conducting research not for
the benefit or use of others.

Though
the results of the research work done by it are occasionally published they
have never been sold. There is no material to show that the knowledge so
acquired by PRL is marketable or has any commercial value. IT has not been
pointed out how the knowledge acquired by PRL or the results of the research
occasionally published by it will be useful to persons other than discloses
that the object type of study. The material discloses that the object with
which the research activity is undertaken by PRL is to obtain knowledge for the
benefit of the Department of Space. Its object is not to render services to
others nor in fact it does so expect in an indirect manner.

It is nobody`s
that PRL is engaged in an activity which can be called business trade or
manufacture. Neither from the nature of its organisation nor from the nature
and character of the activity carried on by it, it can be said to be an
`undertaking' analogous to business or trade. It is not engaged in a commercial
industrial activity and it cannot be described as an economic venture or a
commercial enterprise as it is not its object to produce and distribute
services which would satisfy wants and needs of the consumer community. It is
more an institution discharging Governmental functions and a domestic
enterprise than a commercial enterprise. We are, therefore, of the opinion that
PRL is not an industry even though it is carrying on the activity of research
in a systematic manner with the help of its employees as it lacks that element
which would make it an organisation carrying on an activity which can be said
to be analogous to the carrying on of a trade or business because it is not
producing and distributing services which are intended or meant for satisfying
human wants and needs, as ordinarily understood.

We,
therefore, allow this appeal and set aside the award passed by the Labour Court at Ahmedabad in Reference No. LCA
105 of 1982. However, in view of the facts and circumstances of the case there
shall be no order as to costs.